Abstract
Piketty's influential book Capital in the Twenty-First Century and its prominent review by Milanovic in the Journal of Economic Literature both assert the inevitability of an increasing share of capital in total income, given a higher rate of return to capital than the rate of growth in income. This paper shows by a specific example, a logical argument and its intuition that the alleged inevitability is not valid. Even just for capital to grow faster than income, we need an additional requirement that saving of non-capital income is larger than consumption of capital income. Even if this is satisfied,the capital share may not increase as the rate of return may fall and non-capital incomes may increase with capital accumulation.
| Original language | English |
|---|---|
| Pages (from-to) | 82-86 |
| Number of pages | 5 |
| Journal | European Journal of Political Economy |
| Volume | 38 |
| DOIs | |
| Publication status | Published - 2015 |
| Externally published | Yes |
Keywords
- capital
- capitalism
- distribution
- income
- income share
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